Employer-Sponsored Health Coverage Isn’t All It’s Cracked Up To Be

Employer-provided health insurance is often considered to be the paragon of medical coverage. We’ve all heard about the “Cadillac” plans running around with all the bells and whistles, but according to two new studies on health care expenditures, even people with job-related insurance policies can be on the hook for hefty medical bills, CNN reports.

$1,200 In Out-Of-Pocket Spending

A new report from the Health Care Cost Institute suggests that workers and their family members paid out an average of $1,200 in out-of-pocket costs, including deductibles, copays and co-insurance, in 2017. That’s an increase of nearly 15% compared to just five years ago. Total spending for people with job-based insurance coverage increased to an all-time high of $5,641, but this number includes payments from employers and insurers.

Health care spending continues to increase, outstripping the rate of inflation and the growth of the economy as a whole. But according to Niall Brennan, CEO of the Health Care Cost Institute, the yearly increases in expenditure aren’t being driven by increased utilization – it’s the services themselves that are getting more expensive.

Health care services simply cost more today than they did last year. Brennan explains: “working Americans and their families are using the same or fewer health care services, yet the costs of those services keep increasing.” These rising costs have led to an increased burden on American consumers, including those with employer-sponsored coverage.

Rate Of Underinsured Rises

In fact, health care bills have become so big that many people with job-provided insurance policies are liable to find themselves considered underinsured. At least, that’s the finding of a new report from the Commonwealth Fund, a health care think tank. Approximately 28% of adults with health insurance through their jobs were underinsured in 2018, an 8% increase from the 20% observed in 2014.

These underinsured consumers are really feeling the burn. When you’re underinsured, it means that your health insurance deductibles reach at least 5% of your household income, or if your annual out-of-pocket costs (excluding premiums) reach at least 10% of your household income. Low-income people are considered underinsured if either their deductibles or out-of-pocket costs exceed 5% of their annual household income.

Lest you think being underinsured isn’t much of a problem, think again. Some estimates from the Commonwealth Fund suggest that around 23% of underinsured adults skip a recommended test, treatment or followup, while about 30% of these people say they have trouble paying their medical bills. Only 13% of the fully insured run into similar troubles.

Deductible Increases Burden Americans

Deductibles are on the rise across the board. The average deductible in 2018, according to the Kaiser Family Foundation, was $1,350, a 212% increase since 2018. That means deductibles grew eight times faster than wages over the same period. And while the soaring deductibles from many Obamacare plans catch headlines, it’s actually the deductibles from employer-sponsored policies that are taking the biggest chunk out of consumer pocketbooks. In point of fact, the underinsured population is growing fastest among those with employer-sponsored plans.

It’s an open secret that many companies have chosen to hike deductibles and co-pays to keep up with rises in premiums. It’s no silver bullet; both deductibles and co-pays have risen faster than wages and inflation in recent years. There is room for hope, however, as employers seem to be reducing the rate at which deductibles are rising.